Following Nokia’s earnings report Thursday, everyone wanted to know whether the mobile sales slump had hit rock bottom, when they came to know of the world’s largest phone manufacturer reporting a 90% drop in profits, its lowest ever in over a decade, including a 19% drop in shipped handset numbers.  Grim figures, indeed!  Despite which, Nokia’s shares jumped 9%, Nokia’s chief financial officer stated Friday, the struggling cell phone market is yet to touch bottom, stating: ‘We don’t believe that the mobile phone markets have touched the bottom of this recession yet.’
 
According to him, inventory clearing was brisk at the start of the year, which gives home for the future, even though Nokia reported a 27% fall in January - March sales, its first-ever quarterly pre-tax loss.  However, its statement of seeing signs of a stabilizing demand despite a tumbling handset market, helped calm jittery investors.
 
Nokia blames its falling Quarter 1 sales on distributors cutting back inventory, but even if this is the end of inventory de-stocking from retailers and distributors, with no real signs of consumer demand improving, inventory could languish, providing little impetus for increased sales.  In plainer words, if consumer demand fails to improve, mobile phones will simply gather dust on shelves, including customers trade down will have handset makers see their average selling price fall quickly.